FHTA Tourism Talanoa: Seeking Positive Growth

Fiji Hotel and Tourism Association, 11 July 2024 – It’s hard sometimes to draw a balance at times like these.

After the recent budget announcement, one must find the perfect balance between welcoming whatever Government announces or standing our ground and risk burning bridges, so carefully crafted in years gone.

But FHTA knows that policy stability is paramount for any industry, but particularly critical for tourism, a sector heavily reliant on predictable (and TIMELY) regulatory frameworks and Government support.

In the context of Fiji’s 2024-25 budget, Government’s commitment to maintaining policy stability sends a reassuring signal to investors and businesses that have traditionally braced for sudden policy direction changes – not always for the better.

By assuring continuity in policies related to tourism, such as tax regimes, incentives, and infrastructure development plans, Government fosters an environment conducive to long-term investment.

We know that policy stability reduces uncertainty for investors, mitigating risks associated with fluctuating regulations or sudden policy shifts.

For instance, maintaining consistent tax incentives for tourism-related investments encourages businesses to plan and execute projects with confidence.

This stability also enhances Fiji’s attractiveness as a destination for foreign direct investment (FDI), particularly in tourism infrastructure like hotels, resorts, and eco tourism initiatives.

When investors perceive a stable policy environment, they are more inclined to commit capital to projects that promise long-term returns, and if you’ve been around for as long as this industry has been; years of often painful experience have taught you that “long-term” means you also need the patience and perseverance to see those projects through, because the ease of doing business in Fiji is anything but easy.

For tourism, plying your business in this slice of paradise might involve expanding existing developments, upgrading facilities for an enhanced visitor experience in response to trending demands, or more often than not; reviewing operational practices to embrace more sustainable practices.

Moreover, stable policies attract not only traditional investors but also international development banks and funds seeking stable environments that will see their investments through.

Widespread industry consultation also plays a crucial role in shaping effective policies that benefit both Government and stakeholders regardless of sector. But only when the wider industry, and therefore larger parts of the economy, reap the progressive benefits.

By engaging with industry leaders, associations, and local businesses, Government gains valuable insights into the sector’s challenges, opportunities, and priorities.

FHTA made a thorough submission – as we always do.

Some things have been heeded and promises being better addressed, and others have been ignored perhaps in favour of other perceived benefits we can only hope will pan out.

Discussions on tax incentives or regulatory reforms can highlight how certain proposals might impact tourism operators, prompting adjustments or phased implementations that minimize disruption.

The 2024-25 budget introduced several strategic adjustments aimed at bolstering economic resilience while supporting key sectors like tourism.

Among these adjustments, a notable move includes the complete removal of the 3% duty on imported raw materials.

This decision should be welcomed by manufacturers because it shows they’ve been heard and the rewind in fiscal policy, reduces operational burdens and makes Fiji more competitive in this space while ensuring we can continue to grow our export markets.

Previously, the 3% duty on imported raw materials also posed a significant cost hurdle for tourism businesses in Fiji who were/are reliant on imported goods ranging from construction materials to hospitality supplies but faced inflated operational expenses.

This was never more obvious than during the pandemic.

Due to restricted international movement and a sudden drop in supply, prices skyrocketed and those in tourism trying to renovate or expand were hit with spiking costs that eventually get passed on to consumers, as is the nature of the beast.

Of most interest is that Government has earmarked a considerable portion of the budget for infrastructure development. An area that requires marked improvements across a range of projects that form the very bones of a strong support system for a developing country.

This includes investments in road networks, the replacement of critical bridges, bringing an ageing water system into the 21st century, addressing public amenities like deteriorating hospitals, and creating more enabling environments for renewal energy projects to flourish that can bolster power supplies.

All crucial for supporting not just further tourism growth, but the more rapid development of other industries, ensuring a more diversified economy.

Among the notable projects are the expansion and improvement of major highways connecting tourist hubs, aimed at reducing travel times and enhancing accessibility to popular destinations such as coastal resorts and cultural sites.

We do not doubt that our higher populated areas will also want some focus on improving their daily commute times in and out of Suva and Nadi, but a common conundrum for city fathers has been “where and how do we start?”.

So, while they work on a plan (we hope they ARE already working on a plan), allow the tourism improvements to bring in the much-needed extra revenue this will require once those plans are ready.

Additionally, upgrades to water systems, including wastewater treatment facilities and potable water supply networks, are prioritized to ensure sustainable tourism development.

Which we can all agree is long overdue and extremely critical for the already commenced new tourism developments that will eventually tap into these.

The long-term advantages of these infrastructure enhancements extend beyond immediate visitor experiences, supporting economic growth by increasing tourist arrivals and revenue for local businesses and stimulating economic activities across various sectors.

Additionally, upgraded infrastructure enhances Fiji’s competitive edge in the global tourism market, attracting investment in new ventures like eco-tourism and luxury accommodations, diversifying visitor offerings and increasing the destination’s appeal.

All of these will obviously require more skilled workers.

Quickly.

So the focus on TVET training that can upskill people who are desperately needed for development projects, construction and services has also been welcomed.

Ensuring we are getting things right economically requires that the Government keep the conversation going with industry players and the private sector.

By taking constructive criticism, feedback and advice seriously; future budget measures can better address our economic needs based on learning from what has worked and what has failed.

A more business-friendly environment with fewer bureaucratic hurdles will attract more investment and foster sustainable growth. An area we are all desperately awaiting much-promised improvements.

Tackling bureaucratic challenges and enhancing policy transparency are also crucial for maintaining investor confidence.

Simplifying regulatory processes and providing clear guidelines will help create a more predictable and stable business climate.

This will encourage both local and international investors to pour resources into Fiji’s tourism, manufacturing, construction and finance sectors – all identified as having greater growth potential; and fostering the innovative expansion that Fiji needs.

We welcome the investment in the public sector through wage increases and additional training. We look forward to seeing how these initiatives can improve productivity.

Ultimately, a supportive and efficient regulatory framework will enable businesses to thrive and contribute significantly to the nation’s economic development.

The 2024-25 National Budget sets a promising stage for the future of Fiji’s tourism and other industries; but only if we get the basics right first.

And that means delivering on those areas that have been promised.
Fantasha Lockington – CEO, FHTA (Published in the Fiji Times on 11 July 2024)